At issue here is the news that the Obama Administration dropped plans to force financial institutions to offer “plain vanilla” financial products that are simple enough for consumers to understand. My headline is editorial enough on this issue. So, rather than editorialize this latest announcement, I’ll quote from the press.

There’s no good reason for this capitulation, except for the financial lobby has so effectively captured Congress that no reform would be able to get through with such a common-sense provision in place… I fear that by the time Congress is done, the Consumer Financial Protection Agency won’t be able to protect consumers at all — and that’s assuming it’ll even exist.

At a hearing before the House Financial Services Committee, Treasury Secretary Timothy F. Geithner announced that the administration had dropped a provision in its plan for a consumer financial protection agency that would have required banks and other financial services companies to offer so-called “plain vanilla” products, such as 30-year fixed mortgages and low-interest, low-fee credit cards

Angela Merkel warned fellow world leaders on Thursday not to make the fight against global imbalances the central issue of a meeting of the world’s 20 largest economies, which kicks off in Pittsburgh on Thursday night.

Speaking in Berlin before boarding her flight, Ms Merkel came close to accusing the US and Britain of backtracking on the issues of financial market regulation and global limits on bonuses for bankers by shining the spotlight on the export-oriented economic policies of Germany and China.

“We should not start looking for ersatz issues and forget the topic of financial market regulation,” she said in her clearest comments to date. “We cannot afford to neglect this issue now.”

About Edward Harrison

I am a banking and finance specialist at the economic consultancy Global Macro Advisors. Previously, I worked at Deutsche Bank, Bain, the Corporate Executive Board and Yahoo. I have a BA in Economics from Dartmouth College and an MBA in Finance from Columbia University. As to ideology, I would call myself a libertarian realist - believer in the primacy of markets over a statist approach. However, I am no ideologue who believes that markets can solve all problems. Having lived in a lot of different places, I tend to take a global approach to economics and politics. I started my career as a diplomat in the foreign service and speak German, Dutch, Swedish, Spanish and French as well as English and can read a number of other European languages. I enjoy a good debate on these issues and I hope you enjoy my blogs. Please do sign up for the Email and RSS feeds on my blog pages. Cheers. Edward http://www.creditwritedowns.com

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52 comments

The evidence remains at 100% in one direction: Any attempts at piecemeal “reform” will be gutted or otherwise fail completely. The existing political class is irredeemably corrupted and cowardly. Any attempts at Change through that political class are foredoomed. Anyone who doesn’t understand this is by now willfully blindered.

I know, lets find out next time if that’s really true. You know, just as an experiment. Because it seems to me we can all clearly see now that ‘meaningful reform’ — whatever that is — will not be happening, and so without this the “too big to fail” crap is more or less the ‘mother of all moral hazards’.

Some banks are too big to fail. Many are too insolvent to be able to withstand meaningful reform. I think the strategy for recovery is based upon banks earning their way out of this mess. Unfortunately, they have no hope of doing it honestly, so we’ll let them do it dishonestly.

I don’t believe the CFPA is central to financial reform. Nevertheless, I agree with your sentiment that no meaningful reform will come of this. We are now in a period where conditions seem to be improving though still fragile and the hoi polloi don’t want to rock the boat. When the economy eventually finds itself on solid ground, the revisionist history will start, and we’ll be told “see, there’s no need for reform, everything worked itself out”.

“When the economy eventually finds itself on solid ground, the revisionist history will start, and we’ll be told “see, there’s no need for reform, everything worked itself out”.

Gee! I can’t wait to see the economy that will find itself on solid ground when consumers are tapped out for the foreseeable future while financial institutions have pretty much all the rights to raped them further.

There is no sustainable advanced economy without fair and basic protections for individuals. Period!

Yes another instance of the persistent belief that the economy runs in cycles, and that “the cycle” is now turning up and can be counted to end the mess on its own, without any action on the part of the Powers That Be–that there is no need for reform because the system is inherently self-correcting and will work itself out. (This is the mirror image of the boy who cried Wolf–the villagers don’t respond to the boy’s calls for help because they believe the wolf will leave on his own.)

Now I’m not saying that the economy can’t run in cycles, but part of the reason it would run in a cycle is that people take actions at the bottom of the cycle to allow the upswing to form–liquidation, reform, etc. In other words, the business cycle can only occur when people are not complacent about its existence.

I’m not sure what good another government agency would have done in any case, but the fact that it is being quietly shelved is just another example of the Administration’s failure to accomplish anything at all. Obama is increasingly looking like a guy who can’t crack heads and get things done–a well-meaning, well-spoken amateur who is in over his head. Such men are oft times dangerous.

It sounds like you are a ‘saltwater’ guy? Are you suggesting that the government should intervene in the business cycle and Obama is not doing so?

I ask that merely because there is a lot of back and forth in policy circles about government’s role and it is central to economic policy.

That said, I think you could make an argument that reform does not have anything to do with the business cycle and is merely addressing the need to formalize and better the rules of the game in the way rules govern a sporting event.

I’m more salty than saltwater, I think :>) For the record, I think that Steve Keen is on to something with his suggestion that both the saltwater and freshwater people are wrong regarding the creation of money–that loans are demanded and made and then money is created to provide them (I hope I’m not mischaracterising.)

My point is not so much that “the government” should or should not do something concerning the economy–merely pointing out that the totemistic belief that recession is followed by expansion prevents those in charge from taking the actions that would allow recession to be followed by meaningful expansion. The business cycle doesn’t just happen on its own; it occurs because economic actors do things that seem right at the time without reference to some longer frame of “history.” For instance, part of the destructive part of the business cycle is the elimination of some producers and the dimunition of competition, which allows for the remaining producers to recover and thrive. If, however, one takes the view that “things will get better naturally” and the productive capacity and ownership is not culled, then no one will thrive but rather just exist in some kind of twilight stasis (see Japan). So the government intervention which is aimed at staving off price declines is also going to prevent a healthy rebound.

To put it in a sports metaphor–there won’t be a rebound if the shooter doesn’t fail.

I hope I’m not being callous about the destruction that failure causes–I’m not even going to make a sweeping judgment that letting things fail is a better path. All I am saying is that you can’t expect a vigorous rebound without a nasty fall.

I agree that reform does not necessarily have anything to do with the business cycle. However, in our government today, no substantive changes are made without the impetus of a crisis (real or manufactured). That is why, in practical terms, real reform will not occur without a period of crisis. I believe the AA people call it hitting bottom.

Then I think you would also support the notion that real reform seldom (never?) originates in government at all. Rather it comes from the grassroots; individuals and businesses that see they are being destroyed, and turn to government for relief or for broad protections against institutionalized theft of various kinds.

So failure in your usage is felt far down on the ladder, and the pain has to make its way back up to reach the ears of those who run things.

Now let me ask you something; right now (since maybe 1995) who is running things? It would not be remotely cynical to say that the financial giants are running things. Does anyone seriously think they give a fetid dingo kidney about pain below? Or will lend an ear?

Thus I suspect the normal cycle of fixing things via reform is dead and buried. I cannot think of even a complicated way (forget anything simple at this point) to reverse this. It remains for some sort of apocalyptic event to come along and essentially wipe out the entire structure to level (literally and figuratively) the field enough for anything meaningful to proceed from this point.

Democracy is vulnerable to being taken over by oligarchs. Its natural defense against this is self-immolation.

Re Cougar’s comment: It’s hard to argue with your logic. But as has been noted by many others a) the “checks and balances” U.S. Constitution is essentially a conservative change mechanism, militating against fundamental change and b) the Senate as composed is inherently conservative (rural, non-change oriented). So, radical change only occurs when you have a Roosevelt/Lyndon Johnson, kick butt Presidential leadership willing to take scalps and basically imposing change.

Regrettably, not only has the Congressional Democratic Party sold out on just about everything in terms of real meaningful reform but Obama has (so far) turned out to be an ingenue when he was advertised as a tough Chicago pol.

The problem with grassroots reform is that it can, at this point, only be based on a true revolution, which simply won’t be allowed until and unless things get very, very desperate and the Union actually starts to collapse. And this actually is one possible trend line in this increasingly enclaved country. Then you are talking about reconstructing a different country (or more likely a confederation of countries)

As a person who voted for Mr. Obama for President, you can’t imagine how disappointed–no, disgusted–I am with his policies since he was elected.

He is ALL TALK, and NO WALK. In fact, his smiling face is all talk all day, everyday–incessant and insincere. Yet he has not delivered on a single “change you can believe in” promise he made during his campaign. He has folded (like a limp shirt) to financial lobbies (including his inhouse lobby, Larry Summers) on critical economic matters, he doesn’t know what he wants in the way of healthcare insurance–as long as he can put his name on a piece of legislation, and his backpedaling so fast on his commitment to Afganistan (“the good war”) that I’m surprised his own feet haven’t hit him in the face.

Next time, I’ll just vote for a Republican, who I know will be a supply-side booster of big business, further cut taxes while increasing spending–mostly needlessly on defense (& adding to our debt), and will screw the little guy and less fortunate while smiling ear to ear and saying, “Ain’t America great–the land of opportunity!” At least I’ll know it’s a lie from the getgo. So much for Obama’s hypocrisy!

Your comment very much reminds me of something Martin Luther King once wrote:

It may well be that the greatest tragedy of this period of social transition is not the glaring noisiness of the so-called bad people, but the appalling silence of the so-called good people. It may be that our generation will have to repent not only for the diabolical actions and vitriolic words of the children of darkness, but also for the crippling fears and tragic apathy of the children of light.

I would like to leave a calm and measured response to Lilguy, but the sentiment behind his comment is so infuriating and disgusting that I simply cannot. What semi-experienced human being in his right mind should have rightfully expected Obama to be a savior? You honestly expected a politician to sacrifice himself for *your* good? Does this not seem idiotic when I phrase it this way?

Listen, don’t expect anyone to sacrifice himself or herself for you. It’s not a rational expectation. This is the perhaps the most insidious problem with our society (our “obese and happy” society): the mass and contradictory delusion that each individual has that he or she can have exactly the world he or she wants without doing any work or making any sacrifice to make it happen. I am surrounded by these people every day, and it sickens me.

You expect Obama to effect change when no one in this country is really sacrificing or clamoring for change? The only people in this country making noise are the birthers and the town hall screamers. Where are the protests? Where are the marches from Selma? They don’t exist. Where are the sit-ins and the Kent State shootings? They don’t exist. Where are the people actually *doing* something to demand financial reform? They don’t exist. All we have are some people writing blog posts and other people leaving comments to that post. Wow. That’s powerful. I would be really frightened right now if I were in power.

And your so-elegant-solution to this problem is to switch parties? Do you not realize that this is exactly how the oligarchs want you to act? Switch parties every few terms but don’t actually do something to change the system?

Great. Move from the party that is making things worse to the party that is making things worse more rapidly. And then next decade, switch back. Problem solved!

Obama is not going to sacrifice his own career for your good. Pretty much no politician is going to do something like that. He’s working for the people who are going to advance his career: the oligarchs. That’s just the way it is. Get used to it. No one is going to make the world the way you want it unless you *force* them to do so.

I’m sorry you feel cheated, and I’m sorry you’re hurt. But for just a few moments, examine the possibility that that’s on *you* rather than blaming someone else.

If all you do is go into a voting booth every few years, nothing will change. So honestly, with all due respect, either do something real or stop complaining.

As a nation we are 3 generations too late (and that many too soon) from having enough balls to stand and fight for common and worthy principles.

But a century of creeping deprivations will toughen us, and some future generation will (again) look to their greater principles past their narrow individual desires and do what it takes to change things on the ground.

We can shorten the learning curve by being ourselves a voice for fairness and justice, and by vocally defending democratic principles for the many against abuses by the powerful few. The sooner that the signal is given that these abuses must end — and will end — the sooner the real struggle will be joined towards that end.

That’s not talking like a Marxist. That’s talking like a patriot. Anyone who cannot appreciate the distinction has missed the crux of the problem.

Yo, Anonymous Jones, I think you must have mis-read something in my comment. You seem to be making two points:

(1) You say I want Obama to do something that will do me some good. Pretty much not true. I am financially independent and quite effective at playing the investment/finance/tax games as they are–and have been doing so for decades. That doesn’t mean the current economic/financial policies are “right”, that is, serving the interest of most Americans or the economy. The continued redistribution of wealth & income to the top tiers of the US populace is undermining our economic and democratic future, possibly resulting in some of the more violent actions alluded to in this stream.

My wife & I have health insurance for life–including extended nursing care later on–so the most likely outcome of universal healthcare plan (with or without a public option & other features) is that my costs would go up with no benefit advantages. Again, however, some 15% of Americans do not have health care and need that protection.

Finally, I have NEVER believed a war was in *MY” self-interest–especially because I have served in combat–but I believe it is important to national security that we eliminate the safehavens used by radical Muslim terrorists, most notably in Afghanistan & the tribal areas of Pakistan. That would help protect America, but it’s unlikely to affect me personally. (If that sounds like McCain, I’ll take that rap–but I won’t vote for the guy.)

(2) While I don’t expect Obama to sacrifice himself for me, I do expect him to actually pursue a policy agenda that remotely resembles the platform he campaigned on. This includes curtailing financial excesses, reforming health care, and continuing “the good war” (his words) in Afghanistan among others. His economic/financial policies have been straight out of the W playbook–which he deplored last autumn, he has not stood for anything on healthcare reform–compromising initially & then caving in as others have pointed out, and his actions on Afghanistan explicitly contradict his campaign promise.

And, for the record, I have done more than complain on blogs and switch candidates (I’ve never voted on a party basis). If someone has the time to start to organize action to achieve progress on the above items (eg–Ron Paul’s audit the Fed initiative for starters), they can count on me for financial and personal support.

But “merely” writing a check and blogging simply will not cut it, Lil Guy.
You, Lil Guy, have to RISK something far greater than that…you and your ilk need to move way way way beyond your cozy comfort zones of ‘check writing’ and blog commenting. Re-read Anonymous Jones’ comment to you and this time don’t skip the uncomfortable parts. Lil Guy, you have to step away from the laptop keyboard and go make a physical unambiguous hard to ignore PROTEST in physical form that makes it very clear that you are not happy.
That was clearly what Anonymous Jones said and you blithely did not address it and chose instead to ramble on about your wealth and healthcare.

I too live in a very deluded community, Asheville NC, and just last night I had to endure yet another whiny “Obama Sticker On My Car” guy and his crying about how he is going to run away to Canada. Sniff. Sniff.
Sheeesh….with an army of lily-livered lawn-chair-folding fighters, no wonder Obama takes all yall for granted.

I voted, wide-eyed and quite sober, for Obama knowing full well two things about my vote: that a vote for Obama in ’08, in the long run likely be no different than a vote for Kerry in ’04, and who really thought Kerry would “Change the world”; and 2) that most rabid voters would sling their tails between their legs and run to Canada once they discovered Obama was Bill C. or Carter, etc, hence guaranteeing my forecast that Obama will stay as he is, rather than take the time as active and still-engaged activists, thru trial and error, to locate the pressure points for change on that administration.

I knew most staunch (and naïve) Obama supporters would be useless come November 5 and beyond because they were too risk averse to anything meaningful beyond responding to blogs and writing checks.
Blogging won’t get you the change you want.
Checkwriting won’t get you the change you want either.
Lil Guy, you need to go about two light years beyond ur comfort zone to earn, thru risk and real sacrifice, the Change You Desire.
At the end of the day it will always be about R-I-S-K.
Risks For you.
And yes, Risks For me.
For certainly, Risks for Obama.

Lilguy — I appreciate your response. It was inappropriate of me to direct all my ire at you personally when it was simply what I saw as the subtext of your comment that upset me.

For the record, I do still think it is unreasonable for you to “expect [Obama] to actually pursue a policy agenda that remotely resembles the platform he campaigned on.” I know this might be a shocking statement to most people who depend upon others to uphold their promises, but it doesn’t matter that 80% of the people uphold their promises 80% of the time. This is irrelevant. You cannot expect a politician to uphold his promises once upholding his promises is no longer in his best interest. History is bursting at the seams with evidence of my last statement.

Your expectation does unfortunately fit a popular definition of insanity (continuing to do the same thing and expecting different results).

Krugman made an argument on the subject many months ago. Obama has a really bad habit of negotiating against himself in hopes of getting support for a bill before he asks anyone to sign it. He gives back key features early in the process in hopes of it somehow making for an easy pass in Congress. Then when it actually gets to the negotiating table, the other side sees a weak Obama who doesn’t know how to negotiate so they demand MORE and he gives more. If or when it finally passes it’s so horrible and watered down that Obama has to spend the rest of his political capital arguing that it wasn’t a waste of time to get the junk reform we ended up with.

We need massive financial reform and just pushing it all onto the Fed’s desk isn’t the solution anyone should want.

A “new” consumer protection agency begs the question of who would be protected and from what? It might take a 500 page bill plus months writing new regs and rules after creating a new agency (either separate or within an existing) to monitor the process. And then what? The smart people will simply work around the rules as they always do in a rules based circumstance. And with “consumers” now “protected” their recourse may end up even more limited.

I have never had a problem getting a plain vanilla mortgage albeit with a near half ream of government required documents. Fixed rate, no pre-pay, 30 year, no PMI, etc. I have also had a no-doc (liars) loan, an adjustable rate (LIBOR based) loan at various times and from my 1980’s era – a Land Installment Contract held by the seller with 11% interest (actual mortgages were much higher if you could get one).

Credit cards? Again, plain vanilla or with “benefits” have always been available if one qualifies. If you don’t carry a balance then interest rates are a non-issue. If you carry a balance guess what? You’re spending more than you earn. Stop doing that and you effectively walk away from the avaricious banks and credit cards. We don’t need an agency or CFPA we need to be able to say “no” to ourselves.

So who will be protected and from what? My guess is that such an agency and/or bill will mostly be for the benefit of AFSCME (plus their federal counter-part) and trial lawyers.

Worse, a CFPA is not the type of financial reform that might actually break the Washington-Wall Street nexus that has bankrupted the country (world?). The multi-trillion stimulus/loans/guarantees/et.al. have masked the problem. As long as the Fed/Treasury/WhiteHouse can mask the problem for another 7.5 years all will be well – for them.

Carrying a 10,000 peso (approx. $750 USD) balance, the annual interest rate is nominally 55.50%. But with all the extra little charges they add on, the actual rate you pay morphs to 74.05%. With a 100,000 peso balance (approx. $7,500 USD), the nominal rate is still 55.50%, but the effective rate drops to 64.19%.

In Mexico, if a business double-charges or over-charges you, or if you want to dispute any charge whatsoever on your check card, there’s no calling the bank and having the charge removed pending resolution of the dispute. Instead, you have to contact the business and they have to agree to call the bank and request the charge be removed.

If an embezzler is able to access your account and steal money, regardless if the breech was due to neglect of the bank, even if it is shown that bank employees were involved in the fraud, the loss is yours, the bank is not required to indemnify you for your loss.

These are just the things that I have either read about or personally experienced. I’m sure there are other abuses. And this is in a country where two-thirds of families live on less than $600 per month.

Yes, and how about the lovely multi-colored shards of broken glass cemented to the top of those high brick walls by which much of the populace of Mexico feel compelled to protect themselves from other manifestations of the laissez-faire utopia?

For that matter, why haven’t the LF utopians adopted Haiti as their poster-country of choice? Who needs any government and all that burdensome regulation?

You say “Mexico is close to being a failed state and its problems go far beyond excessive credit card interest rates.”

That’s the sort of self-serving reductionism that is popular with US officialdom and mainstream media. However it has little to do with what’s really going on in Mexico, and it ignores the fact that much of the reason Mexico is lacking in protections for its people is due to the neo-colonial interference into Mexico’s internal affairs by the United States. Perpetrating the myth that Mexico is close to being a failed state is a way to justify continued intrusion by the US into Mexico’s internal affairs, all with the objective of imposing neoliberalism so that a favorable operating environment can be created for multi-nationals like Banco Santander Serfin and Telmex, a large chunk of which, I might add, is owned by the US-based corporation SBC.

The notion that Mexico is close to being a failed state has been around since at least the early 1980s. Bob Woodward details in his book Veil: The Secret Wars of the CIA how the CIA operative Brian Latell was dispatched to Mexico and that, after noting the urban and rural unrest, large foreign debt, enormous capital flight, and widespread corruption duly concluded that Mexico was ripe to fall.

All of these machinations fall within a broader “U.S. National Security” framework, which, according to the Mexican politilogue Adolfo Aguilar Zinser “is a global strategic doctrine, relative to maintaining economic, political and military supremacy in its zone of influence.” In the name of its hallowed “national security” the US has transformed itself into what Daniel Yergin labels “a national security state—a nation in which external and national security concerns become dominant and domestic concerns are subordinated…”

As the U.S.’s Latin American “sphere of influence” has deepened, every challenge to US hegemony—from guerilla movements to a moratorium on foreign debt payments to a reluctance to privatize a national petroleum corporation to drug money laundered in Latin political campaigns—is evaluated by Washington as a possible threat to its own “national security. Mexico, by the sheer weight of propinquity, presents the greatest threat to the “national security” of its northern neighbor. Oil, drugs, immigration, and subversion are all issues that heighten US paranoia.

The chances of Mexico becoming a failed state are quite remote. I could cite a great deal of information contrary to official US propaganda, but let me just say that, despite all the political theater, the plutocrats here in Mexico, backed by the US government, rule this country with an iron fist. This is a country where poor people are given multi-year prison sentences for stealing a package of tortillas. There is little doubt in my mind that if TPTB here in Mexico decided to eliminate the heads of the top seven drug cartels they would all be dead within a few days. The archbishop of Durango pretty much said it all a couple months ago when he said that everybody knows the whereabouts of Mexico’s Numero Uno drug capo, El Chapo Guzman, except the authorities.

There is of course no bona fide political will here in Mexico to do anything about the drug trade. That business brings more greenbacks to Mexico than do its petroleum exports, than do the remesas that 12 million Mexicans working in the US send back home, than does tourism or do manufacturing exports.

Mexican political operatives are, however, masters of political theater, of creating illusions and appearances that defy reality. The Peruvian novelist Mario Vargas Llosa probably summed it up best when he called Mexico “the perfect dictatorship”—a dictatorship with all the appearances of being a democracy. American politicians are still a little backward in this regard, but they appear to be learning fast.

Is this what is seriously passing for logic on this blog now? Applying a “label” to Mexico such as “failed state” and then dismissing it as a comp for all purposes at all times? What could you possibly be adding to the conversation by labeling Mexico a failed state and then rejecting it as having no instructive value for us? Does it not occur to you that LF policies (anarchy, what-have-you) may have created the situation that you label “failed state?” That maybe pursuing LF policies here to the extent the libertarian wet-dreamers want will make the US a failed state? I think the point just flew by you.

Paul Krugman definitely sees what could potentially happen to the US, as this video indicates:

“On bad mornings I wake up and think that we are turning into a Latin American country,” Krugman said. “But on good mornings I think, well this is America, we have always in the past managed to turn ourselves around, and there is an FDR just around the corner if we could only find him. I was kind of hoping Obama might be FDR, but maybe not. ”

referring to something you alluded to in a comment on another thread, but that is germane here since Krugman also seems to think that Obama should fall on his own sword to become the savior of the dispossessed in America. Peter Skerry dubbed this “anti-politics” because it “teaches those without political power that it can be bestowed on them by elite benefactors.” Krugman totally omits the fact that the wolves were nipping at FDR’s heels and he had to reckon with the rapidly growing popularity of movements headed by the likes of Huey Long, Father Coughlin and Dr. Francis E. Townsend.

And tying this all back into the Mexico thing, Patrick Oster, who was Mexico City bureau chief for the Knight-Ridder newspaper chain, observed that CIA agent Latell’s mistake in making his dire prediction that Mexico “will soon go the way of Iran” was “to assume that Mexicans would react the same way that Americans would to such conditions.” “Americans would revolt,” Oster explained. “Latell assumed Mexicans were about to do the same.”

And talking about revolt, what an incredible sham the Tea Party and town hall “revolutionaries” were—all that phony hyperbole about “spilling the blood of patriots and tyrants” (A notion, by the way, that after the French Revolution Jefferson was to recant). Here’s how the plutocrats respond to those they truly fear:

“Protesters” like those that appeared at the Tea Parties and town hall meetings are a permanent fixture in Mexican politics. They’ve become so prominent on the political landscape, in fact, that they’ve earned their own moniker. “Junkyard dogs” they’re called. As often as not they are paid and organized by the very people they supposedly criticize. Karl Denninger, on an unrelated subject, gives us a great example of how the junkyard-dog phenomenon works:

Thus when a burglar breaks into the junkyard, the junkyard-dog barks and makes a grand show of things. But then he immediately goes back to sleep, allowing the burglar to carry off whatever he pleases. The powers-that-be if course love junkyard-dogs, because they give people the impression that their interests are being protected, when they’re really not. It gets people to let their guard down, making them easier to exploit.

@DownSouth and @GentleMutt: both have soared well past my point. I don’t oppose regulation and have argued that “laissez-faire” is French for anarchy. I have always argued that the choice isn’t regulation versus none but when and where to draw the line.

It isn’t regulation I opposed it is the attempt to divert attention away from the Washington-Wall Street nexus by promoting the CFPA proposal. Re-read my last paragraph.

Everyday the sense grows that Obama is destined to be a one termer. The patter from some Republican and/or an, as yet to be revealed, corn pone fascist candidate, will be predictable. Encapsulated, “You wanted change, and you got the status quo. Obama is owned by those opposed to change.”

And they — whoever they turn out to be — will be likewise owned at the outset.

The fix is in. There is no escape. Obama is a nice guy who wants everyone to get along. The next president might well be a thug who wants to get rich, or to topple the Constitution. But we’ll get whoever is the loudest rather than the smartest, and for sowing our seeds on the wind we will surely reap a whirlwind.

“The evidence remains at 100% in one direction: Any attempts at piecemeal “reform” will be gutted or otherwise fail completely. The existing political class is irredeemably corrupted and cowardly. Any attempts at Change through that political class are foredoomed. Anyone who doesn’t understand this is by now willfully blindered.”

I find this a bit alarming if true. It means that you won’t see a reformer become President, either because the system can stop it, or a genuine reformer wouldn’t want the job as the rest of the system would be able to combine to frustrate even someone holding that powerful an office.

This has probably been true in some states for some time (most notably, New York state), which is why progressives and liberals tended to prefer to push reforms at the federal level and took a dim view of states rights.

Don’t worry — remember when Hank, TARP in hand, told us “there will be plenty of time for laying blame and reforming the system”? I guess a YEAR is not long enough.

To the point, though, I don’t think requiring every bank and card company to offer “plain vanilla” products is a meaningful proposal in the first place. A meaningful proposal would be to eliminate all exceptions to usury. Yup, you can get credit at a reasonable rate or not at all. As a nation, we simply decide to banish the money lenders from our country. I would suggest a definition of usury as Fed Funds plus 500 basis points.

I am rapidly coming to the conclusion that we need the stock market to retest the S&P 500 low of 666 sometime in the next 6 months. I think that would scare the shorts off of enough people, including the captured politicians, that meaningful reform could then occur. It would then be clear to most folks that the gamed system will just keep inflating and imploding until the gaming is reduced.

The various prognosticators, politicians, and regulators bleating that the worst is past and the financial system is just fine would clearly be shown to be blowing smoke.The politicians may be looking to the finance sector for contributions but know that imploded 401ks and IRAs are not good, no matter how big a campaign war chest that you have.

Great comments. Steve Roberts, a hallmark of the Obama style is the pre-compromise. He gives away most of the store and then lets Congress give away the rest. This is not a bug. It’s a feature.

Things very likely will get worse, much worse. But this is unlikely to result in meaningful action and reform. The same klatch of dopes, dupes, and cronies will still be occupying the same positions and offices they do now. If the greatest financial crisis since the Great Depression didn’t get their attention or change their behavior a full blown depression is unlikely to either.

As for Merkel, I hate to keep beating up on the Europeans but I will start believing they are serious when Merkel announces the results of a forensic audit of Deutsche Bank and the rest of the German banking industry or when Sarkozy does the same for the French system. Otherwise I see it all as criticizing the placement of the deck chairs on the Titanic.

Mr. Obama has been a major disappointment for me, as a voter. He’s sold out to the banks and the insurance companies in a big way. In his desire to appease all sides has compromised all around. I miss the days when the President had some balls and stood for something, even if that was wrong. Looks like a one-termer to me.

I was a mortgage broker/banker during the boom. If I had a mind to sell an Option ARM (which I hated), this provision would be great!

“Look, here’s a standard 30-year fixed. The government mandates I show this to you, so bear with me. See how the payment is about 100% of your take home pay? Right. Now, here’s a new product we JUST rolled out for people like you! It’s called a Pick-a-payment loan. You just write a check for whatever you think you can handle and we tack the rest on to your balance. The minimum payment is based on a 1% loan amortized over 30 years. Just sign here stating you were shown the 30-year expensive mortgage and we’ll get you into this pick-a-pay.”

Note, I said the payment is based on 1%, which is how they really work. Nothing is said about the rate interest accrues (LIBOR+3.5%, e.g.). I could have sold this product USING the consumer disclosures!

Low fee credit cards would mean that the banks would have to severely limit credit availability and that is why it is a non starter for government. I don’t think this has anything to do with banks, it is an admission that the US economy cannot run without easy credit. This says more about the short termism of politics than banks in my opinion.
Long term low fixed interest loans will cost banks in terms of future hedging and you can bet that they will pass the cost on in some other way. Personally i think if they had suggested long term variable rates linked to fed fund rates it might have stood a chance. The reason this gets knocked back I suspect is that it place more constrictions on what people will borrow and hence limits a housing bubble. This is about confidence in the US consumer and getting re-elected.
This does not in my opinion mean we will not get some useful consumer protection, and if they begin to tackle even a small about of the misleading small print then it will achieve something. The problem is that government wants your vote more than they want to protect you and perhaps a frank admission by government that they cannot stop banks recouping costs in other ways.

I do not favor a consumer protection agency. It strikes me that we need to have consumers who can read and write. We need to have consumers whose purchases are made from either current income or from savings dedicated to the purchase.

For those who assert that they did not understand the contract that they signed, I say for shame. That’s not an admission of ignorance, that’s an admission of stupidity!

I say bring back caveat emptor, bring back personal responsibility. The government cannot protect you from yourself!

As to Mexico, for fifty years I’ve considered it to be a failed state.